#114 Training Elite Wall Street Traders - Michael Steiner on his time at SIG, using games to train market makers & becoming a high school teacher

[00:59] Paul: Welcome to The Pathless Path. I'm Paul Millerd, and in this podcast, we examine the invisible scripts that run our lives and dare to imagine new stories for work and life. So today I'm talking with Michael Steiner, and I was introduced to him by a previous guest I talked to, Chris Abdel-Messa. Who was another just far-ranging, hyper-curious person I was excited to talk to. So I'm similarly excited to talk to you today, Michael. You have a really fascinating background, not a straight line in terms of a career, which makes you a perfect fit for this podcast, The Pathless Path.

You started your career in trading. You also had some experience in ROTC programs in the Army. You created along the way a game called Stock Slam, teaching people about market making and other principles from trading and finance that kind of grew and evolved over the years. Now you're a high school teacher and sports coach, and excited to talk to you today. Welcome to the podcast, Michael.

[02:09] Michael Steiner: Thanks so much, Paul.

[02:11] Paul: I always start with a similar question, and I'd love to just dive back into your childhood and ask a little bit about what was it like to grow up as Michael Steiner? What were some of the stories or scripts you had about what you were aiming towards as an adult? I know it's very ambiguous when we're young. For me, it was like, go to school, get good grades. What were some of the scripts and stories you grew up with?

[02:38] Michael Steiner: Well, so my parents didn't go to college, and, and I was raised like solid middle-class blue-collar. And I think I always knew that I had it really good and I was like super lucky just to be born in the suburbs of New Jersey to these parents and to have their support and to have to like to have the curiosity about things that I have. And, and I think I just got fed the right information at the right pace. In order to just rock it through, not faster than anyone else, but rock it through school with a lot of great feedback and a lot of great inspiring teachers. So, so yeah, I just, I mean, I didn't grow up with a silver spoon in my mouth, but I, but I look back and even going through it, I kind of knew that I was, I was, I had, I had better luck than, than most people, it seemed.

[03:40] Paul: You, you ended up at Penn for college, which— That's right. Must have required some sort of impressive academic achievements. Were you exceptionally curious in any certain areas that kind of drove you in that direction?

[03:54] Michael Steiner: No. And I even, I even didn't know that Penn was an Ivy League school. I just saw it in the, in the magazine with a ton of majors possible at it. And I knew that I wanted to go someplace where I could have access to as much information as possible. And just to have, just to have that wide openness. I mean, I really just picked it as one of my schools that was close enough to that I could be away from my parents, but not too far away.

And then, and then like have all those opportunities. And I didn't even know about the Wharton School or, or any of the, any of the things that went along with Penn, but I quickly learned that stuff and Yeah, it was really mixed out there.

[04:39] Paul: What was that experience like as a first-gen college student? You get in a world like that and you don't really understand what you're entering into. How did you start to make sense of what you had in front of you and what you were going to do next?

[04:54] Michael Steiner: Well, I had an older brother who had gone to a local community college, so I knew a little bit about college. Again, I just got so lucky that I had roommates, these roommates in college who had all different levels of understanding so many different things. And one guy hadn't finished high school. He went right to Penn and Wharton. Another fellow was from Turkey and he was just this math genius and language genius. And then I had another friend from, another roommate from Minneapolis was also just absolutely brilliant and a musician.

I just, so I got again, super lucky. I was kind of the dumbest one I'd say of the of the, of the four of us. And what especially the, the fellow who hadn't finished high school, he like really, really pushed everyone, all of us, and like to take as many classes as possible and just like really have the, have the most amazing time we could there.

[05:51] Paul: Yeah. What kind of effect did that have on you?

[05:54] Michael Steiner: He was— he wound up going into finance also, and he told me like, hey, you're good at math, you need to take these math courses and take, take all these classes at Wharton also. And then another— the other guy was encouraging me to take statistics and, and, and do some, some engineering classes. And yeah, I don't know if it hadn't been for them, those, those guys, I don't know what would have happened at Penn. I mean, ROTC— I was in ROTC, so that kept me more sober than, than others. You know, at college because I had a lot of early mornings and stuff.

[06:32] Paul: Yeah. But do you look back on this and just wonder, it's sort of random you end up around these guys. Do you think it was inevitable you end up going down this math finance route, or was it sort of random looking back?

[06:48] Michael Steiner: I think it, I think it was kind of random looking back. I didn't have a lot of confidence. So, so I, I didn't have a lot of self-confidence. I think I knew that MIT was a place. I knew that NGIT was a place and Caltech was a place, but I thought like I didn't have the chops to even become an engineer. I was really insecure despite all of, you know, despite all of my successes.

I didn't think I could hang at a Harvard. So why I thought I could hang at Penn was only because I didn't know it was It was an Ivy League school.

[07:22] Paul: It was the local school. Yeah.

[07:23] Michael Steiner: Yeah.

[07:25] Paul: How did you start thinking about working in finance? I mean, along the way you must have realized, okay, I can hang with these Penn students. Oh yeah. Or at least there's a path to make my way in finance.

[07:39] Michael Steiner: That was, that was definitely my roommates. And they were, one particular was really into finance and he's, he was a libertarian and we have this, we have this kind of joke going. I don't know, there's a line from the movie Easy Money where he's— he goes, I know it's Back to School, the movie Back to School with Roddy Dangerfield. And he goes on this long rant. But we had a different rant that we would go on. We say that we're convinced that this was the rant.

We're convinced that the next crisis this country faces is going to be an economic one. And I want to be on the front lines with my slide ruler and my calculator beating those, those, the Japanese right back to the Great Wall of China. You know, like some kind of like, you know, like rant thing like, you know, that, that the, that the, that the next sort of romantic job is to, is, is in finance. And it was just, that was just goofy. And, and one of my roommates had, had done some time on a stock exchange floor as a, in the, in the high school as a clerk on the stock exchange floor. And he would always talk about it and how crazy fun that was.

So that was kind of, that was another thing that was bouncing around in my mind, his stories of hilarity on the, on the New York Stock Exchange as a teenager.

[09:00] Paul: Yeah. Did you ever read the book Liar's Poker? And does that sort of resonate with the time period of that world?

[09:07] Michael Steiner: Yeah, I didn't. I've never read the book, but I've heard of it. And yeah, there was, there was a lot of that. The degenerate gambler part of it, there was a strong piece of that, but I never really, I wasn't a big gambler and like bet on sports or even play poker much. Mine was more like trying to figure out the formulas and figure out the right games to, the right answer, not necessarily sitting down at a blackjack table and counting the cards. That sounds like absolute drudgery.

[09:44] Paul: How did you end up at Susquehanna?

[09:47] Michael Steiner: There was a phone interview that a person had to get through in order to, to, to, to get to the next level. And I knew that. And from one of my roommates in college who had— I think he had interviewed with them, but he wound up working for, I think, at Bank of New York and then Bank of America. And so, so, so he, he told me that the interviewer was going to ask you some probability questions. He said, I didn't— he said, I didn't get many of them right. But he said, your math is better than mine, so you might be okay with it.

And that was a— that was the— that was the first time I had contact with Susquehanna. It was a few months after I finished an Army obligation for my ROTC scholarship. It's like, right.

[10:37] Paul: And that's, that's what— did you start there as a trader?

[10:41] Michael Steiner: I started as a junior.

[10:43] Paul: Yeah.

[10:43] Michael Steiner: Yeah. A junior assistant trader. I think I became— I came in onto the Amex and my pretty much my entire career at Susquehanna was in New York.

[10:53] Paul: And what was that like when— what was the year that you started and what was the environment like, the financial world?

[11:02] Michael Steiner: 1996, Susquehanna was still heavily into equity options. There was still— we were still trading in fractions. So the training was to do the quick mental math, to look at the puts and calls and see if they're lined up. And as brokers came in and asked for prices, you'd figure out what the synthetic relationship was to any options that were on the board. And quickly get out of the market. Did that— that's cool, right?

I didn't just talk over anybody's head, I hope.

[11:34] Paul: Yeah. No, we, we can get nerdy on the podcast.

[11:38] Michael Steiner: Oh, good. I was just—

[11:40] Paul: I love going deep. As I was saying before, you're wearing an MIT hat. You didn't go there, but you use it as a trigger to get— find people like me that want to go nerdy and go deep. So, yeah, let's go deep. What were some of the I mean, it seems like you sort of fell in love with probability, statistics, math, all those sorts of things on your journey. How did that start to emerge?

[12:06] Michael Steiner: I think in high school I started my, my love of probability and, and, and expected value. And I think that we learned the lesson about the value of a lottery ticket. You know, you pay a dollar for it and then when they hand it over to you, it's worth, you know, your, the expected value of your, of, you know, of the, of the ticket is, is like, you know, 3 cents. So on average you lose 9 or not even 3 cents, right? It's like whatever, 0.00, like whatever it is, ridiculous. And so, so, so the fact that you, you make this bet and you can show with math how terrible it is and it's like, wow, that's so fascinating, right?

Like, that just opens the doors to the next level. And what's the next level? And what's the next level? How do I answer more difficult questions about probability? And what's counting cards in blackjack about, right? Maybe I can figure out the algorithms of, yeah, just algorithms of how to predict things better.

Yeah.

[13:11] Paul: And that's, I think funny enough, that's around the time when the MIT blackjack team started doing exactly that.

[13:19] Michael Steiner: Yeah. One of my, one of my, one of the guys who taught me the beginning options theory was on the MIT team.

[13:28] Paul: Oh, wow.

[13:28] Michael Steiner: Before, before he, before he joined SIG. So it was that. Yeah, it was, it was kind of cool.

[13:37] Paul: It's such an interesting lens, I think, I see this all the time. So I'm pretty deep in learning about statistics and probability myself. You see things every day that people just take as sort of like facts, but you realize they aren't. For example, jobs numbers, right?

[13:55] Michael Steiner: Right.

[13:55] Paul: Jobs numbers. They give you this very specific number and people see that and they think it's true, right? But you dig into it and you like— I was looking at this the other day. The jobs numbers are like they give you a 94 confidence range, which is pretty wide.

[14:12] Michael Steiner: Yeah.

[14:12] Paul: And then like that means like 10% odds that they're totally way off.

[14:17] Michael Steiner: Right.

[14:18] Paul: Which is pretty high when you're basing like all this expectations of a future of an economy on these certain numbers and like people's psychology and how that intertwines.

[14:29] Michael Steiner: Right.

[14:30] Paul: Do you get frustrated in today's world with like how little understanding there is of like Bayesian probabilistic thinking?

[14:38] Michael Steiner: No, no, I honestly say it's, it's, it's fine. I don't, I mean, maybe when I was younger, I thought, you know, it would be nice to be able to take advantage of this, right? Like, I don't know, some way kind of trick people and get them, you know, like that's what you're doing at a poker table when you're up against like amateurs, right? You're trying to trick them into making bad decisions. And no, I mean, I just, I don't get frustrated. I don't, I, you know, I just, I just keep bringing up the same ideas that statistics are wonderful because they quantify uncertainty for us.

We can finally put a number on something we're not sure of. And once we have a number on it, we can decide what our relative level of anxiety is going to be. So yeah. So there's something very calming about that.

[15:31] Paul: Yeah. Can you bring that alive? Like what, what's a concrete example of like what that might look like in maybe the financial realm? And then I'd love to hear like if you apply this to your personal decision-making as well.

[15:46] Michael Steiner: Oh yeah. For me it's fairly, it's fairly natural, but thanks. I guess so the whole idea of what it means to act rationally, right? Like people are saying you're being irrational, but what they really mean is you're asking, you're reacting disproportionately to the matter at hand, right? That's if something's rational, it's proportional. And if you're acting irrationally, you're overreacting or underreacting.

So we do that with maybe like some, you know, small sample sizes and when, or appropriately sized sample sizes. So, you know, talking to someone, a friend of mine who said, I'm not getting the COVID vaccination until, until more people get it. And I said, how many, how many is that going to be? And she says, I don't know, just more. And it didn't really, didn't really— she wasn't bothering me if she took another 2 weeks to do it or not. But like, that was the end of the conversation, right?

And I wasn't trying to point out anything, you know, weird, like she was making a bad decision. I just wanted to know what her thoughts were. It's like, how confident did she have to be in something in order to act on it? As you know, ideally, you know, we want to, we want to know where those, those levels are.

[17:09] Paul: Yeah. I actually went through an exercise last year where I was trying to quantify like my worst case scenario of what, what it would look like if I sort of just like broke even for the rest of my life and then collected Social Security. Right. And it delighted me because it was pretty good.

[17:29] Michael Steiner: Yeah.

[17:29] Paul: Like, it was like, oh, I could live on $40 grand for the rest of my life, which is like, I mean, it's a non-trivial problem to solve, but it was like, that is a pretty good life, all things considered.

[17:41] Michael Steiner: Yeah.

[17:42] Paul: Now that doesn't make everyone confident. And it's funny, like when you, you ask people similarly, like, what's your number? What's— how much money would you need? You realize it's an emotion, right? It's just more. More is a substitute for, like, insecurity rather than, like, going through the process of saying, well, let's just pick a number and then work backwards and then we can settle it.

Is it?

[18:07] Michael Steiner: That's good, right?

[18:12] Paul: Yeah. So how did you shift from being a trader to teaching this kind of stuff at Susquehanna? And I'd love to hear, like, more about the culture there too, because I know they use poker as a teaching tool. As well, and a lot of other unconventional teaching tactics.

[18:29] Michael Steiner: I don't know. Besides the poker, I don't know if too much of it is unconventional because, you know, so many of the other firms of different sizes would do mock trading with their, with their assistant traders. And they do— they have some sort of training that you'd had to get through and, you know, some call.

[18:50] Paul: Maybe I guess I'm just unfamiliar with sales and trading. Training.

[18:55] Michael Steiner: Yeah. So, so, so the way Susquehanna ran, and then I quickly, within, I don't know, a few months of becoming a trader, so maybe a month, a year and a half into my time at Susquehanna, the way, the way I taught was we, we'd run mock trading sessions and we do like, I guess you'd call them tests, but theory tests and asking them to you know, find the arbitrage, like I give them a board and they have to find the arbitrage on the board. Then, or the— I guess I did. I would sometimes ask them theoretical questions or have them build something for me. But for me in New York, it was to get them ready to go to the next level, kind of like the finishing touches of working with the partners. And taking classes there in Bala Cynwyd, Pennsylvania, at the headquarters.

[19:56] Paul: How did you get into the teaching role? Was that always just a natural pull for you or something you enjoyed doing?

[20:03] Michael Steiner: Oh yeah. So, so for me, the teaching— I love my high school teachers. That's for one. And then for two, I then when I got to Penn, one of my roommates, again, I had the best set of roommates. He just said, you have calculus credit, go sign up as a tutor. They're paying $35 $5 an hour to be a tutor for these Warden kids.

'Cause, you know, they gotta pay, they gotta get smart in calculus. So I did that. So I was like, this is so fun, right? To talk to people about calculus and help them make the connections. So I was like, I need, I always wanted to be like, I realized deep down, I always wanted to be a teacher in a system like a school and, So then that's when I got to Susquehanna. Then, you know, nobody really wanted to teach.

Like, it was one of those things where it's like, who's going to do it? And it's like, okay, I'll run mock trading tonight. And then one guy would come in and say the next time they would, he would say, I just want to play poker. Someone else do it. Right. And I was the one who stood up and at one point I said, well, I'll just take over.

I'll just take this over. I'm becoming a better trader by doing it for, you know, selfish reasons. And the other thing, it was just so fun. Because during the regular day standing around the stock exchange, there's so much downtime and you do fill it in with just, you know, nonsense and silliness and, you know, maybe do some— we, we would always do some rehearsing in our heads and, and, but there was so much downtime that you would, you would, you would just watch the clock and you just, someone would just yell out, can that, can we please rally the clock? It's too slow because there were, you know, but then going home, but going back to the office to do mock trading at night and do, do education, it was— I made it just— it was just exciting. It was crazy trading the entire time.

[21:59] Paul: Did you have a sense that might be a thread that would pull you forward in your life, or is just like, this is just something I like doing. I'm sort of a trader. I'm going to keep doing this.

[22:11] Michael Steiner: I was, yeah, I wasn't sure. I just knew it just felt great. It just, it just to trade during the day and then to teach junior traders at night. Yeah, it was, it was just, it was just a perfect balance of, for, it was a perfect balance for taking, taking and making, right? Like it was just the two things. Yeah.

[22:32] Paul: And maybe, maybe you can bring alive some of the things you actually taught, like What do you mean by mock trading and market making, things like this? How do you actually practice and teach those skills?

[22:46] Michael Steiner: You just start with— I can actually— I know we're going to talk about my game, but the one time I did mock trading, I'll tell you what it was like. And this was the— this was the spark of what became my game. So King Yao was a trader at Susquehanna. He was senior to me, and one day he ran mock trading when I was just an assistant trader. So I'm a trader— I'm sorry, I'm a mock trader. He's in charge.

He tells us what we're going to be doing. He got a VHS tape of a basketball game, and he said, No, no one has seen this basketball game. Was some— he was sure. And he said, you're going to make a market on the total number of points. You're going to trade amongst yourselves the total number of points in this game. Okay.

So we'd never seen it before. And so as the game starts playing out, we're supposed to be making a market on the total points. We don't know if it's going to go into overtime. We don't know if— we don't know what's going to happen. So, so we just start screaming numbers out and we're, we're writing, actually we're writing down on a page, on a piece of paper, like trades with each other. And then at the end it was a dollar a point.

So if you, let's say you did nothing else, let's say you did absolutely nothing else, but you bought one share at 100 points. Okay. And the game settled, the total number of points in the game was 105. Well, that one share that you bought from someone at 100 points is worth now $5 at expiration. And that— where do you get that $5? You get that $5 from the fella from the other side.

So he's minus $5 at the end of the game. You're plus $5 at the end of the game.

[24:39] Paul: And that's that.

[24:40] Michael Steiner: Go ahead.

[24:40] Paul: Yeah, go ahead.

[24:41] Michael Steiner: So market making. So that's trading. Now, market making is the process of stating a bid and an ask price. So the bid is a price where you'd buy the asset and an ask is a price where you'd sell the asset. And you're stating those two prices in order to generate some— generate a transaction. So you might— if the game's playing out, the game's playing out and you just yell out, well, I'll buy the total number of points for 110 and I'll sell the points for 112.

So your market is now 110 bid at 112. And if someone hits your bid, that means you buy it and they're selling. And if someone takes your offer, that means they're buying and you are selling.

[25:36] Paul: And what, what are some of the mental models behind like thinking about doing that? Right. I know Susquehanna was one of the one of the best firms at sort of market making and is still playing a pretty big role in this. Like, what was their actual role? Like, what were some of the things they traded on and how do you— like, how do you think about creating a market in something?

[25:59] Michael Steiner: So, so usually you're not walking into a marketplace for the first time. There's something trading already. So, so, so actually we'll talk about when there's a new product, If there's a product that's already trading and we're exploring the market for the first time, Susquehanna, like anyone else, is just going to do a ton of research and try to figure out where the edge is and maybe look at some historical data. But when you look at historical data, there's so many pitfalls that people can make. Survivor— survivorship bias is one. Right?

You only see the things that are left after something might have weeded them out. And so it also, it's confirmation bias, like you can find a pattern when there isn't one. So, so, so Susquehanna would see something that's trading or anybody and then try to figure out if there's a pricing anomaly or maybe there's a lot of volume, there's a lot of volume trading and just being there can give information to another part of the company, or maybe it's, it's something that, that's, that's trading already. And, you know, there's just, just nobody standing there trading it. You know, there's very, there's very few people there. So there's no, no one has any idea.

So you get to be like an explorer.

[27:27] Paul: And I'm curious to know, like teaching as you started to take more of a teaching role, I know my experiences from teaching is sort of this, oh, I didn't actually understand what I was doing until I had to explain it to other people. So I assume you went through sort of the same evolution. How did that start leading these feedback cycles of your own learning as you were working as a trader during the day and teaching this stuff at night?

[27:56] Michael Steiner: Oh yeah, we, we we can look back at something that was difficult to learn and we can reflect on what it was about it that was difficult. So was it some vocabulary word that we didn't associate correctly with whatever the phenomenon was? Maybe it was, you know, it was a vocabulary word. Maybe it was some contextual, other contextual thing. Maybe it was the math. Like we just didn't, the derivation of the formula, which has a lot of information in it.

They, we just didn't understand that and the importance of it. So that's, so could be a mathematical reason. There's always some reason why something switched from being hard to easy. And then once you explore all those possibilities, then the next time you're learning something, you watch out for them. So that, that order of knowledge, I'm not sure that answered your question though.

[28:52] Paul: Now that I think about it, saying like once you start teaching it and then how did that influence your own learning loops?

[29:00] Michael Steiner: Yeah.

[29:00] Paul: So reapplying the stuff you were teaching.

[29:03] Michael Steiner: Yeah. Well, while teaching it was great because developing the process of getting these junior traders to become market-making monsters, that was— that was a thrill also to see someone go from shy, mild-mannered to ready to scream out a market. That was, that was just truly like, that's my, that's my, that's my guy out there, you know, like girls. But seeing them with their hangups and what helped them get through, what helped them get through things. Oh, that was, yeah, that was great. It helped me with my, anything that I was trying to figure out and it helped me make the whole process better for everybody.

Yeah.

[29:45] Paul: And to set the context, I mean, I know trading pits, you were often like yelling out bids, asks, orders. Is that still done like that? I'm just curious.

[29:58] Michael Steiner: I think just a very few places, but the mechanics themselves are some, you know, that face-to-face negotiation and then the idea of like listening to prices, trading around you and all that information. Filtering out that literal noise is a very valuable skill, I think, when it comes to trading.

[30:21] Paul: How do you turn a shy young person into a market-making monster?

[30:28] Michael Steiner: Exactly. That's what I think I figured out and what I take the most— I took the most pleasure in it. So So one thing I did that I stole from my Spanish language class. So you remember where it says it gave you each line and so each person would have to pick apart and then pick apart and then you'd have to read it, right? And then so you, como te llamas, and like the person, oh, me llamo Juan, and like each person. So you have this script.

So I wrote these mock trading scripts. So I would hand them out to the, to my junior traders in the crowd, and there were exclamation points at some places, right? And like interruptions, like, like if someone said, like for example, I would have someone yell out, I'll pay 4. And then the next person would yell out, I'll pay 3. Now if someone's willing to pay 4 and someone else is willing to pay 3, the person who's willing to pay 3 needs to get in line, right? Because the, the person who's willing to pay 4 has, has standing.

So I even wrote into the script that the person who stated that they're willing to pay 4 would scream at the, that the, that the person who was only bidding 3, like, get in line, you know, uh, it's my bid. Okay. Right. So, so in, in an auction, right? Could you imagine someone in an auction said, I'll pay, I'll pay 3. The next person said, I'll pay 4.

And then someone else yelled, I'll pay 3. You would shout that person down. Well, you have to do that in the, in the pit because otherwise, you know, like you, you, you can't let that happen. So I would write into the script how to shout down a person who's making it basically an illegal market because they don't know any better. And, and so it's— and so the, the fun thing was even if you didn't know what the words meant on the paper, you got used to raising your voice and screaming these words at the top of your lungs, right? And so that was, that was always the funnest exercise because I'm like, you gotta, you know, you're not selling it by whispering it.

I really need to hear you scream out, I'll pay $4.

[32:38] Paul: You know, that's, this is so fascinating. I mean, just the connection of like the body and the mind connecting all these things. Like, were you thinking about this at the time?

[32:50] Michael Steiner: This is just one small part of it. Like, I knew I had to turn them into, into people who could shout stuff out. And I figured if I get them to shout out stuff, the right stuff, even if they don't know what it means, at least I've gotten them to, to, to make this. And I, and I, and I didn't do, I didn't come up with this script thing until, um, a couple years in, but it's one of, it's one of the more fun things that I came up with.

[33:15] Paul: Um, yeah. What other, uh, things did you come up with that were unique or sort of remixing different ways of teaching?

[33:24] Michael Steiner: Oh yeah. So, so that, that was, that was one of them. The other one was that I would— so the hard thing about mock trading is you typically just come in and you just write a stock price up on the, up on the board and then somebody's constantly moving it and then people are supposed to adjust the options and it gets kind of— it gets not— it's hard to coordinate because, you know, the crowd kind of people do things or you, you, you, I mean, you almost have to wing it in some ways. So, but what I, what I did is instead of having like having this winging around thing, I had just a list of tickets that, so like it's like made the whole thing much more random of tickets of things that people had to do, whether they wanted to or not. Like, so they, so they had to, you know, make a market in something or they had to like, they just had to keep picking tickets.

And based on how they pick tickets out of this, out of this big bowl of tickets, they, the, the whole mock trading session could go any, any kind of different direction. So that was, that was something I came up with. And yeah, and then I think I came up with a lot of even just like pen and paper standardized tests things, which was, which was really fun too.

[34:47] Paul: It almost sounds like you were gamifying a lot of how you were teaching. Was that a conscious decision? Were you influenced by any sort of gaming principles, or was that just something you just kept A/B testing and improving things?

[35:02] Michael Steiner: Yeah, I think if I had kept a leaderboard the whole time, I think that would have been a little bit more effective. But gaming, I mean, it is a game and you just— it's a zero-sum game. That's what we say in the, in the finance world. Of trading, at least. So we, I could have, yeah, I probably could have done a leaderboard, but every day was a game. I mean, they knew every, there was, this was not, we didn't have to protect anybody's ego like in, like I do in high school.

I can't tell people each other's grades in high school, but in here, in this, in this context, you know, we could, we can, I could tell them. Right. I can say you're not going to the next level with this kind of score. And what's the person going to say? You bullied me. It's like, no, because you're— I'm not—

[35:50] Paul: I want to do better.

[35:52] Michael Steiner: Yeah. You can't be trusted with any money in order to trade an account right now. So, you know, like you have to—

[35:59] Paul: what, what did you learn from such a hypercompetitive environment? I mean, you're now teaching in a high school and you obviously can't take things to the extremes. But what, what did you learn just about like pushing people and challenging them?

[36:19] Michael Steiner: I haven't, I haven't learned anything about it because I know I just feel, I feel always wary any time I set the bar for anything and I'm always, you know, It's like worried about people like running into the bar, slithering under it, you know, like what I mean, slithering under. I mean, like cheating their way through it or, you know, getting hurt by it. So I, any time I'm always, I haven't figured anything out how hard I can push a group of people.

[36:56] Paul: Yeah. How do you think about raising like In giving people an environment where they can be more aspirational about their own goals, it does seem like you care about that, right? You care deeply about the people you're teaching and you do want them to thrive.

[37:16] Michael Steiner: Oh, yeah. Yes, the design of any education system is going to do that for— that's what I'm trying to do, minimize the struggle with no pain. It's okay to struggle, but not It's not okay to be, to feel pain and, and get the best results for the most people. And yeah, that's, that's always every, every modification I make to my plans is always with that in mind. And I've actually started some just this year. It's only the third day in school, but I'm learning a bit more about setting setting up a class so that there can be multiple paths through materials so that the students who, for example, like a kid who gets 10 out of 10 on a pre-quiz shouldn't have to do homework, but a kid who gets 6 out of 10 on a pre-quiz, I mean, he's got to do some practice before he gets back in there.

So like figuring out how to, how, and the kid who gets 10 out of 10, maybe I give him a very low, a low, low weighted sort of side, side thing to do, you know, like an enrichment, an enrichment project. So I'm kicking that around right now. It's been the— I'm only 3 days into school, but I think I've discovered a few— not discovered, but I'm exploiting a few new technologies for that.

[38:44] Paul: Yeah, I think there was some research from when Khan Academy was launching some of their initial stuff that would show like some people would be behind.

[38:53] Michael Steiner: Oh yeah.

[38:54] Paul: But then eventually over time they would sort of like equal, if not surpass some of these people. So they were like slow at first but fast at the end. So the multi-path model of learning is really fascinating. It'll be great, like with more technology.

[39:11] Michael Steiner: Yeah. Like the choose your own adventure thing of to get through, to get through a set of, it's a bunch of material. He used to have a— a long time ago, he used to have a map where it had you at the top and then all these paths you can go through and all of them connected with nodes. And then at the end there was calculus or whatever it was you were trying to get through. So you had— you just kept— you could zoom in and out of this map. I'm sure it got too cumbersome and it got— it was— but it was wild to see like, oh, I can go down this path a certain distance and then go back up and then go down another path and just keep just, just marching towards this goal, which was— that was really cool.

But yes, I'm— aside from the fact that I have to keep my students for the most part together as we work through the curriculum, sending them down like little— the ones who are ready, not the ones who are not, but sending them down little rabbit holes as we go to do some explorations is, is kind of this— the ones who get 10 out of 10, that's like, that's the next game to Yeah, I would, I would have loved that in school.

[40:19] Paul: I was always the kid that would like finish the math and basically just like sit there quietly. But yeah, I'd love to hear more about struggle versus pain. I think that's so interesting because we, we sort of struggle with this. I think like how to push people, how it's supposed to feel like obviously some challenge is great, but like, what do you mean by pain and how do you avoid that and steer people towards the challenge path?

[40:52] Michael Steiner: So I'm sometimes asking a student to do more than they're capable of and they're— what they're going through is like, they can't get it. I mean, they just don't have the scaffolding to get whatever I want. So now they start to Now they start to feel bad and they start to, they start to suffer. Okay. If it's something you can achieve, you struggle till you get there. If it's something you can't achieve, you're going to, you're going to be suffering, right?

So suffering should be avoided and it should always be about struggle. So, so I'm constantly on the lookout for, for that, right? If I see a student who's, who seems like they're suffering, that's, that's, that's, that's number one priority. A kid who's struggling, it's like, okay, yeah, you got to do You know, and again, it's like whatever, you know, stupid mistakes. You know, I'd say stupid mistakes when a kid will say that. And I hope I'm doing quotes, even if this isn't visual.

Quote, I'm glad that stupid mistakes are, that's struggling. Having no freaking clue what to do, that's suffering.

[42:03] Paul: Yeah. So how do you convince students who might think they're in pain but are actually just struggling and just need to push a little harder?

[42:15] Michael Steiner: No, you just, you just give them a tiny bit of scaffolding, right? You just try to figure out what's the least amount I need to do in order to get this person back on track on this particular topic. And yeah, yeah, it might be some, you know, it might be, it might be some picture that I quickly draw or Maybe the kid sitting right next to them, I can say, I can say, you just asked me this question. You think you can explain it now? And that sometimes helps. So it's just trying to figure out what's going to work best for a kid.

[42:54] Paul: And it seems like you're just super curious about figuring out all these challenges and puzzles.

[43:01] Michael Steiner: Oh, yeah.

[43:01] Paul: I'd love to. Use this as a way to connect back to Stock Slam. You mentioned the seed was planted at— in your trading career. Did you know maybe there's a game in the future I make on my own, or was it just like this curiosity you wanted to keep learning? And how did you eventually end up leaving trading and starting to tinker a little more on the side?

[43:28] Michael Steiner: Oh, so those are, those are a few things to leave.

[43:30] Paul: Yeah, you can break them up.

[43:32] Michael Steiner: Oh, to leave trading and tinker on the side. Equity options were when I, when I left Susquehanna, we, the trading options was getting to be less and less lucrative and I don't know, it just wasn't, it wasn't the flavor. And I guess I probably could have figured out a way to move within Susquehanna, but I really liked, I really liked market making. And I don't know, it's just the time with the time seemed to be right. And so I left Susquehanna after 8 years to become a stay-at-home dad for a stay-at-home dad and then part-time doing other things. But for the most part, staying at the stay-at-home dad for maybe 10 or 15 years.

[44:17] Paul: That's amazing. How was that experience?

[44:20] Michael Steiner: Oh, that was wild. I mean, no, no, almost no babysitters and I was great to be with my kids as much as, as much as anything else. Right. And also miserable. The moments were just absolutely miserable from, you know, whatever, having like 3 kids hanging off you in all different ways. I just think a great New Yorker cartoon would be some guy pushing a double stroller that's empty through Manhattan and he has a Baby Bjorn, which is something that holds a baby against your chest.

And that's just, there's nothing in it. And he's got, as he's pushing the stroller, he's got one kid on his shoulders, like on his, you know, on his head to shoulders, the other, another kid in his arm. And then, then the other kid is just like walking next to the stroller, right? Because it's just, it's just miserable, but it's also really, really fun. So to do things like take my kids to the pool and bring my ukulele along and just sit on a chair off to the side and just just figure out songs while they were splashing in the pool.

[45:23] Paul: You know, that, that's beautiful. Was that something intentionally you sort of intended to last that long? It's something— I mean, it's something I'm aspiring to as well. I think like I'm sort of designing my work to be at least part-time flexible so I can be around when we have kids and So it's, it's cool to hear other men that are doing that as well.

[45:49] Michael Steiner: Oh yeah. I didn't think twice about it. Like as far as like the man versus woman thing.

[45:56] Paul: But I was just saying in terms of like a career, like, did you decide, okay, I'm going to do this for 10 to 15 years, or did you start to take time off and you're like, oh, this is actually a great time to spend with my kids and I want to keep this going?

[46:12] Michael Steiner: Oh, so to be clear, again, this is just luckiness, like lucky and just how my, my wife at the time, her business was really taking off and, and we were kind of stressed out about finding a babysitter. And it was, it just seemed natural with the number of kids, the kids that we had and the one, we also wanted to have another one. It just made sense for me to do it. And also just that my career at Susquehanna, I mean, I was making as much money as ever for them, but it was, you know, just they didn't, it was just, I was just less appreciated. So I was just like, it's time to go. I think we're having a bad year anyway.

So anyway, the stay-at-home dad part was a great gig. And I, yeah, I did other things while I was doing that, like tutoring. And substitute teaching and getting a, getting an education degree and doing some work for the family business.

[47:11] Paul: But yeah, and besides that, when did, when did the path of going into teaching sort of emerge as something you wanted to do? Or was just always something you were doing on the side a little bit?

[47:23] Michael Steiner: Yeah, I was tutoring. I was always tutoring and I was, and I did some substitute teaching in the school where I'm teaching now. So I got a good feel for what the, what the students were like, what the other teachers were like. Being in the, being in the same town, I'm teaching in the same town where I live. And so that's always been nice to know people when I'm— yeah, of my students right now, I've probably hung out with, I don't know, 10% of their parents.

[47:54] Paul: That's amazing.

[47:55] Michael Steiner: I know. Yeah, I know. And I know them from all different walks of life and stuff. So it's pretty— it's a pretty cool— it's a pretty cool gig.

[48:06] Paul: And what is it like teaching young high schoolers all sorts of hormones and ambitions and confusion, probabilistic thinking, Bayesian thinking, stochastic reasoning? Like, how do you transcend the interestingness of these topics to that group of people?

[48:29] Michael Steiner: Oh yeah, I, um, uh, I just, you know, just making connections to them and talking to them is really nice. They're, they're all, um, yeah, they're all going through something. They're all, all like pretty much just 10th graders and they're just, they're just good people. Um, they're all just, they're all kind to themselves and kind to each other and kind to me for the most part. To some of them, I'm invisible just because I'm over 20 years old. So some of them don't see me, you know, and no matter what I say or do, it's just, you know, so, so with them, I can kind of get away with saying anything, which is kind of nice.

They don't hear it. But most of them, most of the students are just so kind and helpful and like to each other. If I, if I say, if I say to one of them, hey, you know, hey, Sally, can you do me a favor and show Jimmy how to do that? They always say yes. They always say yes and they do it and they don't give up until they're done with it. So, I mean, just, just to do that is just awesome, right?

[49:41] Paul: Yeah. And what, how do you like, what do you think you do different based on your background in terms of how you approach teaching than maybe other teachers do. Not to put down any other teachers, but just curious about how you think about it. I mean, you detailed that like you want to make the best program to serve the most students the best way with the least suffering. So you sort of have this like almost like Buddhist sort of orientation towards teaching.

[50:13] Michael Steiner: Well, number one, I tell them that. Well, and I'm also not afraid to tell them that I love them. As creepy as it is coming from a high school teacher. I mean, I tell them I love them because they're my neighbors. They're my cousins if we go back far enough. Maybe they're my nieces and nephews for all I don't know.

But like, if you go back far enough, we're all related.

[50:35] Paul: So it's like 12 generations, right? We're all cousins.

[50:39] Michael Steiner: Oh, yeah. So, so, so like So I'm like, we're in this together. Like, I worry and freak out about the same things they do, maybe different ways and at different levels. But, you know, we're all in this together and we're all brothers and sisters at some level. And that resonates with most of them. And I also tell them they're part of this process of me building the best program for the most people.

I don't know how much they take it, but I do have this one hack I, for my top students from last year, I reached out to them and I, and I, the ones that I found to be the most mature of my students and really the smartest and best, I ask them if they want to be my TAs.

[51:27] Paul: Oh, wow.

[51:28] Michael Steiner: For the following year. And they're, and, and so I have 7 this year already. And so, so they're helping me build I'll show them a prompt and I'll say, can you build me 15 questions around this prompt that, you know, talks about slope and talks about averages and it talks about increasing, decreasing and, and everything. And, and, and, and they, and they looked at me and they're like, sure. And I'm like, yeah, they want to help. They're awesome.

They know what their part is. And, and yeah. And I told them from this they get the most ass-kicking college recommendation, right?

[52:06] Paul: That's awesome. Yeah. Every kid wants that in high school.

[52:09] Michael Steiner: Yeah, but they're not doing it for that right now. They're doing it because, you know, they're like, they're so— they know what they're doing. Like I said, I show them my plan and they're like, oh, I see how I fit into this. This could be really cool.

[52:23] Paul: So that's so cool. What is a TA position, a normal sort of thing, or did you invent that at your school?

[52:30] Michael Steiner: So my high school, there is— you can be a TA or you can do independent study. I don't know any other teacher who capitalizes on this TA-ship thing. It's— I almost feel like the teachers should be recruiting these kids to be their TAs, right? Like after they finish their classes, they should be going over to the kid and saying, hey, I want you to be the Algebra 2, my Algebra 2 TA next year, you know, like, or come, come be my TA. I'm just— I tell them if they're my TA for honors physics, when they get to AP physics, Like, it's not even going to be a class for them. They're going to know all of everything already.

[53:10] Paul: Where do you get that energy to, like, want to believe in people and root for people? I think Tyler Cowen says one of the greatest things you can do is, like, raise the ambitions of other people. And that's something I try to embrace in my journey as well.

[53:26] Michael Steiner: Yeah, I don't know. I just— high school was was one of the funnest times of my life. So I just, like, for me, that's kind of where I draw a lot of my energy. It was an easy time. But so for me, some of the kids who are struggling, I know I have to like dial it back a little bit.

[53:49] Paul: Yeah.

[53:50] Michael Steiner: I'm very conscious of that. So they, like it might be the 15th time I'm saying it, but it might be only the second time they've ever heard it. So just being careful with them. But in terms of like motivation, I just, I love high school. I love being in the high school. It's exciting that the students are just, yeah, they're fun, funny.

[54:17] Paul: What do people have wrong about the next generation? Like you just see so much negativity about like, oh, the next generation's not going to thrive. But every time I meet somebody that's young, I am sort of blown away and impressed. People seem far beyond like where I was at similar ages.

[54:35] Michael Steiner: Oh yeah, academically, absolutely. They're more advanced than I was. And I think I mean, I probably went to as good a high school as I'm teaching now. And yeah, these students have so much more opportunity and so many of them are jumping on it. But what I how I feel about it is, in terms of education, it's going to maybe take a few more years to get to the level of rigor, the average level of rigor that we had before the pandemic. Yeah, it's been tough transition.

But, but, but the one thing I say was that is that these, these teenagers, they're so kind to each other. Wow. Like, when you— when they're next— when they're with each other, they're— I, I don't see any bullying. I don't see any, like— I mean, I don't know, I don't think I have blinders on, but, but, uh, inside my classroom, um, yeah, they just— they're just— they're just kind to each other. And then— and they're kind to me for some reason, right? And they— I have kids who I, I give— I gave them, uh, Fs, like Fs over and over again, and I'm just You know, please come to me for help.

And they're still maybe getting asked and they still, they're still kind to me. And I'm like, I don't. And of course I'm kind back to them.

[56:00] Paul: Yeah.

[56:01] Michael Steiner: But they're just, I think they're just happy to be there and have another grownup that's not yelling. I'm not yelling at them. You know, I just say, you know, can I show you the order of operations? How, You know, you have to do the exponents before you divide by 2 or, you know, like, that's awesome.

[56:21] Paul: I'd love to shift back to Stock Slam. When did that start taking hold? I know it was like right before the pandemic when you, you felt like you finally got the formula for the game. But when did you start working on that more seriously? And like, where is that now?

[56:40] Michael Steiner: So I, so I say, I think I mentioned the germ was the germ sort of start was sort of the idea started with King Yao making us watch a basketball game and we were making a market in the total number of points. And I, when I, as I, the, what I, what I was watching was I was watching this game happen where we had no idea what the, what the solution, what the end result was going to be. So it was sort of stochastic. but, but, but my idea was like, how is this repeatable? Like, I can't get— I can't have basketball teams keep doing this thing, right? I need to write a program.

I need to figure out a way to show again, now we're going to stick a multi-way race. So a race amongst a bunch of people or players that is, that is, that is random. But the walk itself of each character is random and the final winner is random, but it looks like a race. It basically looks like a race that you're watching. And so imagine going to the horse race and a horse race and the horses are, the horse race itself takes 20 minutes. So as this horse race is going on and different horses are pulling ahead and falling behind, you can trade your bets with other people in the crowd.

If you offer them the right price for their tickets, they'll sell it to you. And then now you've, you know, you've changed what, which horse you're betting on. And then maybe you take that ticket that you just bought and you sell it at a profit and you're managing a portfolio of all these bets on all these horses. So that's, I knew that that was going to be the game. Probably like my final game, I knew that probably, I don't know, within a year of kicking around this idea of what King showed us, but I never could figure out how to, number one, simulate that game, and number two, what the actual mechanics were of recording your trades with each other. So, It took me, it took me 20 years to learn the computer programming in order to write the simulation, in order to write the board that we'd interact with.

And then it took me another few years to realize how to work the mechanics of the, of making the trades. And now it's, now it's complete.

[59:16] Paul: Yeah. So it sounds like Stock Slam now is in a good, good place. Like what, what's the next step with Stock Slam?

[59:24] Michael Steiner: So I talked after talking to two old students of mine, Tina Lindstrom and Chris Altamessiah. I happened— Tina happened to reach out to me on Facebook just to say hi. And I said, oh, this is amazing. You're one of my students. Can I show you this, this, this thing I developed? And she immediately reached out to Chris.

And while she's talking to me, she's like, what do you wanna do with this? And I said, I have no idea. Like no trader has seen this yet. I've shown it to people and I've playtested it and I've, and I've, and I've even made the Kickstarter video, but I didn't really have the, I didn't have the big break that I was looking for. I mean, I had taken it to conferences and playtested it in front of, in front of people and gotten feedback and, and, but no, you know, it's no publisher. A game publisher would have to be walking by when I was playing it or something to get, you know, for me to decide.

It just was, I wasn't getting any leads. The plan was to continue to just play it with my students, maybe in a finance club or something. And then, but when Tina saw it, she immediately understood what it was about. She understood what it would be good for. And Chris, Paul the Messiah pretty much saw the same thing. And in a three-way conversation with them, the question was asked, what do you want to do with this, Steiner?

And I said, I'm open to suggestions. And Chris suggested that we get this out there to the people through his connections and Tina's connections. And that's what we're doing.

[01:01:10] Paul: It sounds like— I mean, I watched, I watched a video of people playing this game. It's like, hey, very exciting. It's very interactive. Are you really trying to, like, inject the trading floor energy?

[01:01:24] Michael Steiner: Oh, yeah. Yeah. And if you see, if you see those videos, those are middle schoolers who have just been briefed on the rules and the grown-up who's jumping around them as me. I'm just having the best time and keeping order to the market so that they don't step on each other and they make their intentions clear. But for the most part, like, I'm trading with them, I'm encouraging them to trade with each other. And yeah, it simulates pit trading.

[01:01:55] Paul: So that's awesome. And what are your plans with this? I mean, I I think you're hosting sort of a trial 3-day session in New York. Is this end of September or beginning of October?

[01:02:09] Michael Steiner: Beginning of October. Chris and Tina have sent out an invitation for people who are interested, and it's just going to be a few sessions with people who I'm just looking for some, maybe some feedback and what they how they think we're going to— I'm not sure what the next thing is going to be, but we're going to use that, use that session to inform our next move. But I could see building, building a course around it to teach, to teach decision-making and option theory and derivatives pricing. And I could also see that what I— this is This would be like a dream come true almost. But you saw how, you saw the, what, how crazy that was with, what, like with 10 middle schoolers and me?

[01:03:03] Paul: Yeah.

[01:03:04] Michael Steiner: There's no limit to the number of people who can play this game at a given time.

[01:03:08] Paul: Oh, wow.

[01:03:09] Michael Steiner: So, so we could, I could have a session with 200 people. And as long as we had a projector to project this, this one board, like like where they have to see to make their pricing decisions. As long as I have a big projector where everyone can see it, like a movie screen, I could have 200 people basically pit trading and it's a zero-sum game. So someone would have the most money and someone would have the least money and they would just be a ranking and you would just know, like, like not who's the best trader. It could be who got the luckiest, right? But it would be, it would be a pit for simulated, like, like no other in the world.

And that's— that would be— and I kind of— it would— like being in the middle of that would, would like, you know, be a dream come true.

[01:03:59] Paul: That's amazing. I definitely want to play, play this at some point. What, what do you think are some of the lessons you're hoping people take from a game like this, even if they're not in a finance environment?

[01:04:14] Michael Steiner: Oh yeah, I've always— it always comes back to kind of finance. I think in general, understanding the value of something, that's what this game is about in some ways, because it's a market and where buyers and sellers come together on a price is the market. A stock doesn't go up because there's more buyers than sellers, because every time there's a print, there's a buyer and a seller on both sides. A stock goes up because there's some kind of information out there that people are reacting to. And so that's what my game is about. It's about price discovery and, you know, equilibrium.

It's about gambling and knowing risk.

[01:05:08] Paul: Yeah. Do you think This, these sort of principles can help guide people's life decisions too. I think, I mean, one thing I've been thinking about a lot is sort of like pricing my time. So there might be freelance opportunities I get and they might have like a decent wage, but then there's a cost in terms of like my energy and to my soul, like, so I think a lot about like, okay, I need to factor in all the costs and all the prices and I think a big flaw people have is they sort of just look at like monetary price. Do you think some of these ideas are applicable in this sort of lens?

[01:05:50] Michael Steiner: Well, the game itself is, is just, yeah, straight up like who can make the most money with the least amount of risk. But for sure, even at the, even throughout certain parts of the game, there's this like sort of expectancy. Like you can look at, you can look at the branches of the tree and try to figure out what things are worth. And then, then like just figuring out any, the value of any decision under uncertainty. My game is, my game is doing that because I don't think I don't know the answer to any of the prices when I'm playing my game and I designed it. And so the decisions, I could write a spreadsheet to give me some ideas for some prices as I'm playing the game, but I'm not even sure I could figure it out.

So when you're making a decision and all of the outcomes are clear, you can still make a decision. And then you're just looking, yeah, you're just looking for the feedback. In finance, it would be, are you winning or you're losing? Is the bet moving against you or for you? And then like in life, you just, yeah, you just, you make a decision and then you just keep evaluating, I think.

[01:07:04] Paul: This is amazing. Where, where can people find out more if they want to learn more about Stock Slam or some of the stuff upcoming? I'll figure out some of the links to put in so I can attach some links if people want more information. And I know Chris has more of a social presence, so I can link up to him as well.

[01:07:26] Michael Steiner: Yeah, the, the playstockslam.com. All one word except for the dot com, is the board that people— when you go there, you can play around and see like the random walk of a stock. So you can actually see the stock. So you can actually watch the race that you would be betting on, on the stock. So that's just a fun simulation. But for, for actually learning more about it.

I mean, I have, I have a Facebook page and I have some videos there of people playing it, but nothing. Yeah, I don't really have a big Twitter presence or any of that other stuff. Yeah, Chris. Yeah. I mean, I think I have Play Stock Slam on Twitter or something like that, but Chris and, Chris and Tina are the ones who have just been, just been spreading the word and they, And that's— yeah, that was so humbling. I said, I said, you can get me some— you can put some asses in the seats for me to, to play this game with people like some people in finance.

And, and Tina said, hey, Steiner, all we have to do is tell them that you taught us and people will sign up for it. I was like, that's it. Wow. Right. It's like, that's all you have to say.

[01:08:56] Paul: Yeah. Yeah.

[01:08:58] Michael Steiner: And I was like, I was so humbled. I hadn't talked to them for 25 years and this is how they— this is how they repay me.

[01:09:06] Paul: Yeah. I mean, I sense you've had an impact on many people and I really appreciate sharing your journey and the story today. I think it's definitely an inspiration for my path, and I just appreciate— it seems like you're still so energized about your, your life and work. So appreciate that.

[01:09:28] Michael Steiner: Thanks, Paul. Awesome. Thank you.